Organizational injustice in frontline employees at bank for investment and development of vietnam – south saigon branch

Duong Bao Thinh ORGANIZATIONAL INJUSTICE IN FRONTLINE EMPLOYEES AT BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – SOUTH SAIGON BRANCH MASTER OF BUSINESS ADMINISTRATION Ho Chi Min

Duong Bao Thinh

ORGANIZATIONAL INJUSTICE

IN FRONTLINE EMPLOYEES

AT BANK FOR INVESTMENT

AND DEVELOPMENT OF VIETNAM

– SOUTH SAIGON BRANCH

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – 2017

Duong Bao Thinh

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR NGUYEN PHONG NGUYEN

Ho Chi Minh City – 2017

Executive Summary

Frontline employees play a very important role in the performance of bank as they directly work with customers and produce incomes Despite having a very good start, recently, Bank for Investment and Development of Vietnam – South Saigon Branch has to deal with poor performance, negative behaviors as well as high employee turnover rate Organizational injustice in frontline employees is identified as the central problem to this undesired

situation Four elements are considered to be the antecedents of this organizational injustice, they include poor performance rating system, lack of employees’ participation, low

communication quality and poor implementation However, after considering the applicable ability at the branch, one cause is taken into investigation which is poor performance rating system The set of four possible solutions is evaluated, three of them (redesigning the

performance appraisal system, raters training and cross-department appraisal) are selected to solve the central problem This project is estimated to gain a net saving of approximately 400,000,000 VND over 3 months of testing and 6 months of officially applying with the initial investment of 100,000,000 VND

Table of Contents

Executive Summary 1

Table of Contents 2

List of Tables 4

List of Figures 5

CHAPTER 1: BACKGROUND 6

1 Company Background 6

1.1 BIDV Overview 6

1.2 BIDV – South Saigon Branch Overview 8

2 Symptoms 10

3 Problem Identification 14

CHAPTER 2: PROBLEM JUSTIFICATION 17

1 Problem Definition 17

2 Problem Existence 19

3 Problem Importance 24

CHAPTER 3: CAUSES VALIDATION AND SOLUTIONS 27

1 Possible Causes 27

1.1 Performance Rating System 27

1.2 Employee Participation 29

1.3 Communication 31

1.4 Implementation 32

2 Causes Validation 37

3 Solution Design 39

3.1 Possible Solutions 39

3.2 Evaluation of Solutions 44

3.3 Change Plan 51

Conclusion 55

References 56

Appendix A 60

Transcript 1: Thao – Retail Banking Officer 60

Transcript 2: Thoa – Teller (Ex-MHB Employee) 61

Transcript 3: Vinh – Corporate Banking Officer (Resigned) 62

Transcript 4: Quoc – Retail Banking Officer (Resigned) 63

Transcript 5: Tran – Human Resources Manager 65

Appendix B 67

Appendix C 69

List of Tables

Table 1 BIDV South Saigon Branch SWOT Analysis 9

Table 2 Change in Fixed Deposit Balance of Retail Sector 10

Table 3 10 Branches with Worst Retail Credit Net Interest Margin 11

Table 4 10 Branches with Worst Retail Credit Outstanding Growth 11

Table 5 BIDV Capital Mobilization Per Retail Employee in Ho Chi Minh City 2016 12

Table 6 BIDV South Saigon Retail Indexes as of 31/08/2016 22

Table 7 Highlight Opinions from Informants 22

Table 8 Summary of Interviewees’ Sentiments and Potential Causes 35

Table 9 Estimated Cost and Benefit of Solutions 50

List of Figures

Figure 1 BIDV – South Saigon Branch structure 8

Figure 2 Potential Problems 15

Figure 3 Organizational Justice Tree 17

Figure 4 Components of Organizational Justice Theory 19

Figure 5 Updated Cause and Effect Tree 36

Figure 6 Causes Types 37

Figure 7 Final Cause and Effect Tree 38

Figure 8 Proposed Cross-Department Appraisal Model for Corporate Marketing Department 44

CHAPTER 1: BACKGROUND

1 Company Background 1.1 BIDV Overview

The Joint Stock Commercial Bank for Investment and Development of Vietnam (hereinafter shortly referred to as BIDV) – the longest established bank in Vietnam – was founded on 26 April 1957 as the Bank for Construction of Vietnam It operated under that name until 24 June 1981 In 1981, it changed its name to the Bank for Investment and Construction of Vietnam It adopted the present name on 14 November 19901

In January 2007, the Vietnamese government announced that it would sell stakes in four state-owned banks, including BIDV – one of the biggest lenders However, the

government continues to hold a majority stake in these banks

In December 2011, BIDV achieved a significant transformation in the development process with a successful IPO, officially becoming a joint stock commercial bank in May

2012 On 24 January 2014, BIDV successfully listed all of its 2,811,202,644 shares on the

Ho Chi Minh City Stock Exchange The bank’s shares ranked sixth in capitalization value among listed companies on the VN-Index2

From a single owner, single-function bank, BIDV has risen strongly and overcome many difficulties to grow and affirm its position in the economic market BIDV has made great contributions to both the development of Vietnam and the relations between Vietnam and countries around the world

The bank’s efforts were recognized not only by leaders of the Vietnamese

government but also by international leaders In 2015, BIDV celebrated its 20th anniversary

operating as a fully commercial bank, as well as international integration into the economic market3

BIDV is among the largest banks in Vietnam with about 23,000 employees It has grown to become one of the leading commercial banks in Vietnam BIDV offers full

banking products and services including deposits, loans, e-banking, guarantees, trade

finance… The bank boasts subsidiaries in finance, banking, securities and insurance

BIDV has expanded its business to the international markets including Lao PDR, Cambodia, Myanmar, Czech Republic, Russia Federation and Taiwan As well as leading the way in terms of links with foreign countries, the bank joined hands with local

governments to hold conferences and forums with the aim of promoting their potential for a more prosperous Vietnam

On 25 May 2015, Mekong Housing Bank (MHB) officially merged with BIDV As

of the end of 2015, BIDV’s total assets were VND 857 trillion (USD 38.3 billion) As of 30 September 2016, total assets reached VND 956 trillion (USD 42.9 billion), up 11.5 percent year-to-date, making BIDV the largest bank in Vietnam by total assets3

In 2016, BIDV has also received prestigious awards from several organizations These included highest taxpayer in Vietnam; TOP global 2,000 largest public companies as voted by Forbes; 11 fixed income poll awards from Asiamoney; Best Retail Bank in

Vietnam 2016 as voted by The Asian Banker; highly commended award: Excellence in social media – customer relations & brand engagement as voted by Retail Banker

International and the Vietnam excellent brand awarded by Vietnam Economic Times3

1.2 BIDV – South Saigon Branch Overview

BIDV – South Saigon Branch was established in November 2010 with more than 110 employees It has one head office and four transaction offices located in district 4 and

district 7 The branch’s customers widely spread from millions of individuals to enterprises and large corporations

Figure 1 BIDV – South Saigon Branch structure

In 2015, BIDV – South Saigon Branch received the award for Excellent Branch in Southern Area

As of the end of 2016, the branch’s deposits were VND 5,500 billion while total loans were over VND 12,000 billion Services net income in 2016 reached about VND 28.5 billion, accounted for 21% total net income

BIDV – South Saigon Branch

Front office Back office

Corporate banking

Retail

marketing

Corporate customer services

Individual customer services

Transactions offices

Khanh Hoi transaction office

District 7 transaction office

Nguyen Van Linh transaction office

Dan Sinh transaction office

In 5 years, BIDV – South Saigon branch has recorded a significant development in loans, deposits and services… Its financial performance has outrun many long-established branches

The branch’s mission is to provide the highest standard of modern financial banking services to customers; to create a professional and friendly working environment with ample career opportunities and benefits for all employees, and to be pioneering in community development activities2

Table 1

BIDV South Saigon Branch SWOT Analysis

Strengths

• One of the largest and well-known banks in Vietnam

• Large customer base

• Wide branches network all over the country

• High quality employees (in term of academic standard)

Weaknesses

• Profit sources are not diversified, mostly from credit services

• Deposits is decreasing, especially from individuals

• Slow adapt to market changes

Opportunities

• Support from the government/ministry of finance

• Credit/new banking service needs are increasing

• Low competition in some market/services: investment banking, asset management, derivatives…

Threats

• High competition from other rivals

• Uncomprehensive legal/regulatory

2 Symptoms

Although BIDV – South Saigon Branch was doing quite well in the past years, since

2016, based on the reports done by headquarters and branch’s financial performance as well

as staff feedbacks on internal website and via meetings, there are five salient issues that have badly affected the branch performance: (1) Slow change in interest rate which makes our interest rates less competitive to other rivals, (2) Complex process of derivatives

services, (3) Employees’ attitudes with customers, (4) Employee frustration, (5) High

employee turnover

As issues (1) Slow change in interest rate and (2) Complex process of derivatives services are related to headquarters policy and administration, we cannot impact on these issues from the stand point of a branch Moreover, the frequency of customers’ complaints

as well as faulty operations is more often lately Hence, this paper is going to focus on the issue of employees’ attitude, frustration and turnover, especially those who are directly interacting with customers

Recently, more and more customers complain about poor quality of service and attitude of the frontline employees Some customers switch to another branch or even leave for other banks This situation has led to a dramatically drop on deposit balance and credit profits, especially in retail banking sector

Table 2

Change in Fixed Deposit Balance of Retail Sector

Q3/2015 Q1/2016 Change Fixed deposit (in billions VND) 2,430 2,389 -41

Table 3

10 Branches with Worst Retail Credit Net Interest Margin

Rank Branch Retail credit net interest margin as of Q1/2017

10 Branches with Worst Retail Credit Outstanding Growth

Retail credit outstanding (in billions VND) Rank Branch Q4/2016 Q1/2017 Change

Retail credit outstanding (in billions VND) Rank Branch Q4/2016 Q1/2017 Change

7 Nam Ky Khoi Nghia 601 567 -34

8 Thai Binh 860 829 -32

9 Bao Loc 2,299 2,268 -31

10 Ho Chi Minh City 1,394 1,362 -31

Note Adapted from BIDV internal report 2017

As an indispensable result, the branch net profit has gone bad (below target) from the beginning of 2016 and receive a low rank in comparison with other branches especially in retail banking area

Table 5

BIDV Capital Mobilization Per Retail Employee in Ho Chi Minh City 2016

Rank Branch Capital mobilization per retail employee (in billions VND)

Rank Branch Capital mobilization per retail employee (in billions VND)

13 Nam Ky Khoi Nghia 76

14 North Saigon 72

15 Ben Nghe 62

Note Adapted from BIDV internal report

Beside poor performance, many frontline employees often express frustration with customers and colleagues They tend to give back answers, talk improperly to others and refuse to do assigned tasks (information collected from reports by secret customers program and feedbacks from other departments)

In addition, increasing employee turnover has filled our managers with concern In less than 12 months, there were up to twelve resignations, nine of them are from frontline employees while as of the previous year, this figure was just three

In-depth interviews were conducted with employees to find out the reasons why they were not satisfied or left the bank They have shown that frontline employees, to the large part, are unhappy with their job and some even felt dissatisfied or wanted to find a new job

Due to downturn in banking industry in recent years, the number of employees has declined dramatically that make the current employees have to deal with an excessive amount of work which used to be shared among several staff4 “I don’t feel the motivation

of working here anymore Every day I just want to get home as soon as possible … I have

to work without a reasonable job allocation and reward system”, shared by Thao – a senior retail credit officer “There are some sorts of issues… and I have to free myself … What I got just doesn’t reflect the efforts I put into my work.”, said Vinh – a corporate banking officer who quit his job The most common opinions were that they felt too stressful while

being treated unappreciatively and rewards were not accordingly distributed among staff as well as departments These going issues can definitely decrease employees’ satisfaction and affect company’s overall performance

Frontline employees play a very important role in the performance of the bank as they do the most interacting with customers and receive customers’ responses about bank’s products or services then contribute significantly to the customers’ access to the services of the bank5 The importance of frontline employees’ interaction with customers is considered

to be a psychological phenomenon that exerts a major impact upon outcomes If customer leaves with a negative impression from the attitude of an employee, other efforts may be overlooked6 Yavas7 stated that “frontline employees are the most critical link in the

provision of superior service to customers and their actions are also critical for service recovery when a service failure occurs” Thus, digging into the reasons and solutions for these issues is an essential task to help boost the branch performance

3 Problem Identification

From the defined symptoms, informants gave their own thoughts about what existing problems our branch is dealing with Derived from their interviews, work overload and injustice in the workplace are recognized with initial evidence to prove for the damage to work quality

Specifically, Rizwan’s8 research revealed that work overload is positively related to job-stress in banking sector According to Yavas7, the existence of job stress leads to several problems like reduction in employee productivity, job dissatisfaction, loworganizational commitment and propensity to leave the organization, etc

Moreover, organizational injustice has distinct effects on individual and

organizational outcomes including low organizational commitment and job satisfaction,avoidance behaviors as well as low job performanceoutcomes (detail analysis is shown in chapter 2)

From the collected information about the organization’s context, a cause and effect diagram which enables us to brainstorm and classify the variables that might be causing poor performance9 is proposed as follow:

Potential problems Symptoms

Figure 2 Potential Problems

Based on the interviews with some staff of BIDV – South Saigon Branch and due to constraints in time and resources, this project is proposed to focus on the following

problem: there is injustice among employees in the branch

There are three main reasons for the above choice:

Firstly, interviews with frontline employees suggest that people are not satisfied with the method works and rewards are distributed in their department as well as among different

Work overload

Organizational injustice

Low organizational commitment

Low job satisfaction

Avoidance behaviors

Poor job performance

departments in the branch; they are also upset with the procedures used to determine the outcomes that they receive and the ways they are treated by their managers Detail analysis

is presented in the possible causes below

Secondly, regarding the scope of my role (planning and financial officer), solving the problems of work overload and sophisticated working system is not feasible as there is not enough control over these problems from the branch position In order to deal with these problems, we have to work on the policies ad regulations of the whole bank which is not only affectable by the headquarters but also take a lot of human resources and budget

Lastly, organizational injustice is a continued existent problem that are found

embedded within policies, procedural practices and organizational culture; this problem exists in workplaces and affects many, according to Mach-fell10

The interviews revealed that the lack of organizational justice decreases operational performance (for example, job completion time and quality) and makes the branch less competitive than other branches and banks Thus, the lack of organizational justice is

proposed as the central problem in this project

CHAPTER 2: PROBLEM JUSTIFICATION

1 Problem Definition

Rawls11’ formative theory of justice divided the concept of justice into two

principles: liberty and equality “The liberty principle argues that every person has certain basic rights and freedoms and the equality principle asserts that these should be open to any person regardless of background, ethnicity or gender”11

Organizational justice is a term that was first used by Greenberg12 to describe

individuals’ perceptions of organizational justice

Ambrose et al.13 argued that “injustice refers to an employee’s belief that he or she (or someone else) has been treated unfairly” Moreover, “an employee who feels unjustly treated may try to ‘even the score’ by committing sabotage”

Organizational justice is also stated to be a versatile concept that it covers everything from system of payment to treatment by boss Organizational justice is divided into three different types which are distributive justice, procedural justice, interpersonal justice

Interactional justice is further divided into interpersonal and informational justice14

Figure 3 Organizational Justice Tree

Organizational justice

Distributive justice Procedural justice Interactional justice

Informational justice Interpersonal

justice

Distributive justice refers to an employee’s perceived fairness regarding the

distribution of rewards amongst his or her peers This was largely based upon the notion of equity theory, which used social exchange theory to evaluate the fairness as found by

Adams15 and Colquitt16

Procedural justice refers to the perceptions of employees about the fairness of the procedures used to determine the outcomes that they receive This concept was introduced

to highlight disputant reactions to legal procedures by Caldeira et al.17

Interactional justice refers to employee’s perception of the degree to which he/she is treated with dignity, concern and respect at the workplace18 This concept was first

introduced by Bies and Moag19 focusing on interpersonal treatment Interpersonal treatment has since been categorized further into namely interpersonal justice and informational justice16 The reason of dividing interactional justice into two subcomponents is that

interactional justice reflects the way authorities communicate in a respectful and proper manner, and justified decisions using honest and truthful information However, the respect and propriety rules are distinct from the justification and truthfulness rules, labeling the former criteria interpersonal justice and the latter criteria informational justice, as agued by Greenberg Interpersonal justice describes the degree to which people are treated with politeness, degree and respect Informational justice, on other hand, refers to explanations

provided to people that convey information about why procedure was followed on certain way and why rewards are distributed in particular manner16

Figure 4 Components of Organizational Justice Theory Adapted from Campbell and Finch20

2 Problem Existence

In order to get rid of the complains of customers, increase employees’ quality and boost the branch overall performance, after defining the problem, we have to validate it to judge whether the problem is a real problem which refers to a situation that in reality does not meet realistic standard21

Colquitt16 designed an organizational justice scale to assess employees’ perceptions

of fairness This scale consists of four dimensions: distributive, procedural, informational, and interpersonal justice Initial interviews were conducted to collect factual information and they revealed that organizational injustice is an existing issue that hold the branch performance

From the work of Colquitt16, organizational justice was defined by 20 items

Responses to individual items were recorded to justify the presence of injustice in the organization This set of questions is chosen to access the organizational justice of frontline employees through interviews The answers for these questions are considered for the

Interactional justice:

Empathetic treatment during the communication process

assessment of organizational justice in frontline employees at BIDV – South Saigon Branch This is also used to identified the type of injustice presented (see appendix B for detail)

There are five informants chosen to give information including: Teller, corporate banking officer, human resources manager and two retail banking officers The reason of choosing these interviewees is that they are frontline employees and human resources

manager, the central objects of this research and have at least 1-year experience working at BIDV – South Saigon Branch

Some staff feel that their contribution does not have a corresponding reward “I was still a normal officer after those sacrifices What I got just doesn’t reflect the efforts I put into my work” said Vinh – a corporate banking officer who quit his job He feels that there

is a lack of fairness regarding the distribution of rewards in comparison with his peers Moreover, he also had to deal with the decisions of the appraisal process He expected higher ratings but what he received was not justified, given his performance This generally shows that the employee’s perception holds about the bank as being unfair which is

similarly described as organizational injustice by Mathur22

Moreover, employees who are not satisfied with their performance appraisal usually refer to organizational injustice as per described by that there is a positive link between organizational justice and satisfaction with various elements of performance appraisal23 For instance, Thoa – who used to be an MHB employee – could not find the passion of working any more since the merger of MHB and BIDV, she had to accept a lower position with a much lower salary while the amount of work she was in charge of was the same or

sometimes more than the BIDV staff She shared: “Compare to what I have to sacrifice; the

compensation is a big letdown”; “I think this way of judging new merger staff is not

reasonable because they may not have those kinds of certificates but with their wide range

of experience they can still get the job done nicely” In fact, most of the new merger staff has to receive a salary index under 1.6 while the majority of original BIDV staff salary index is more than 2.15

The interviews also revealed that organizational justice level has been rather low in the context of the distribute the workload, as proved by Quoc – a retail banking officer:

“When he (his manager) decided to put me in the credit card group, he just did it without inform me in advance I mean it’s his right but I need time to prepare for a new role and reorder my other duties and I also want to give my own opinions It would be better if he offers more explanation in a clear manner”; “there are 4 credit officers in my department but

I have to take 40% of the workload”

These observations are in line with the conclusion of Mahajan and Benson that

“researchers have found distinct effects of distributive, procedural and interactional justice

on several individual and organizational outcomes”24

As a matter of fact, the above issues really happened in reality and lead to a

significant decrease in growth of deposit, loan and service income and an increase in costs for finding new customers which then threaten the mission of the branch as well as BIDV in general (to be the leader of commercial banks in Vietnam) All retail indexes are far below target

Table 6

BIDV South Saigon Retail Indexes as of 31/08/2016

No Item Absolute value

(in billions VND) 2016 target Target completed

1 Retail net income 40.9 71.1 57%

2 Retail service net income 3.19 6.31 50%

3 Retail deposits 2,826 3,550 23%

4 Retail loans 576 724 55%

In conclusion, the existence of organizational injustice at BIDV – South Saigon Branch is confirmed through the interviews with four employees of frontline area and one human resources manager Below are some highlight opinions from the informants which are mainly complains about the unfairness in the branch:

Table 7

Highlight Opinions from Informants

No Interviewee Question Answer

to do the job of a specialist

• Why don’t you talk with your supervisor?

• I did talk to him but nothing changes He seems to give no care about this situation

• How about the reward policy?

No Interviewee Question Answer

• I heard that since the end

of 2015, MHB staff and BIDV staff are treated equally?

• None of MHB’s employees have the same payment as BIDV’s… I think this way of judging new merger staff is not reasonable…

• I couldn’t express my views and feeling during my works… I have

no influence over the process of

• You said that the rewards you receive are not fair

Could you tell me more detail about that?

• The rewards were identically divided to all the people in my department… I just want it to be distributed based on what people contributed…

• Why don’t you raise your voice?

• I am kind of afraid of being offensive

• The way some of our managers operated works was not highly appreciated by employees

• Do you have any idea that front line employees tend

to have a higher ratio of quitting job?

• Someone with a lighter piece of work got the same rewards makes them feel unfairly treated

3 Problem Importance

There are many researchers have been working on the relationship of organizational justice with firm performance Their findings argue that three form of organizational justice including distributive justice, procedural justice, interpersonal justice have distinct effects

on individual and organizational outcomes

Folger and Konovsky25 studied the impact of distributive and procedural justice on the reactions of 217 employees to decisions about pay raises by conducting a survey Their work shows that distributive justice accounted for more unique variance in satisfaction with pay than did procedural justice However, procedural justice accounted for more unique variance in two other measures which are trust in supervisor and organizational

commitment They found that fairness in distribution of pay raises has a strong positive impact on employee pay satisfaction Specifically, Thoa – an ex-MHB employee who currently works as a teller shared that the amount of work she had to process was the same

or sometimes more than BIDV staff did but her payment was much lower than theirs; she called it a big letdown in comparison with what she had to sacrifice In a similar situation, Vinh – a corporate banking officer said that after 5 years of hard working, his payment rose insignificantly which let him thought that it is unfair in comparison with the payment of a junior employee and he did not even have any overtime payment

Moreover, distributive justice has been proved to help reduce negative behaviors of

an employee such as employee theft26 and increases work quality27 Pfeffer et al.28 has also found that distributive justice increases job performance Conversely, Mahajan et al.24

concluded that employees behave opportunistically and against the interest of their

organization under low levels of distributive justice

Further, the second form of justice which is procedural justice demonstrates the perception of the employees about “the fairness of the procedures used to determine the outcomes that they receive” It has positive effects on increased job satisfaction,

organizational commitment and decreased employees’ intentions to quit as proved through the work of Folger et al.29 and Konovsky30 These viewpoints are also highlighted in several other studies For example, Kim et al.31-34 found that procedural fairness in decisions

formulated at the parent company can affect subsidiary managers’ higher order work

outcomes such as commitment, trust and social harmony As some of the frontline

employees consider their work load and the rewards they receive to be unfair and they just

do not know how their incomes calculated which leave them with a lot of concerns and therefore, lower job commitment recognized Thus, if the organization has a problem of procedural injustice, it is definitely a very serious threat that need to be taken into account

as soon as possible

Likewise, low job performance, poor work attitudes and conflict among employees are proved to be the result of a low level of interactional justice35,36 Moreover, scholars show that “a victim of interaction injustice will have increased expressions of hostility toward the offender which can manifest in actions of counterproductive work behavior and reduce the effectiveness of organizational communication”37 When replying to the question

if MHB staff and BIDV staff are treated equally, Thoa – an ex-MHB employee who is now working as a teller – said “I feel that those who are originally from BIDV always look down

on people from MHB like me Sometimes I caught them talk badly about us” In addition, Quoc – a retail banking officer – claimed that he viewed the act of her manager as not serious nor professional for him as a frontline staff and he should be treated with more respect and dignity: “I think in a working environment he should be more serious And he should talk with his staff before making any decision about their job… He always decides

on his own… When he (the manager) decided to put me in the credit card group, he just did

it without inform me in advance… I need time to prepare for a new role and reorder my other duties and I also want to give my own opinions It would be better if he offers more explanation in a clear manner” These answers suggest that they are frustrating of being treated in an unfair manner and they do not feel the passion of working anymore As a result, the performance of employees in the unit will be affected badly which then lead to a poor profit of the firm

Employees work in organizations because it facilitates creation and sharing of

knowledge among them and provides an opportunity for them to work together for their mutual benefit38 A poorly employment of organizational justice at workplace does not create the motivation for its employee to fully dedicated and can be the reason for an

unflavored profit and can hurt the reputation of the organization Therefore, as shown to be

an existing problem of the branch which related to the very low net profit of the branch since the end of 2015, organizational injustice has to be eliminated and creating a fair working environment is an indispensable job

CHAPTER 3: CAUSES VALIDATION AND SOLUTIONS

1 Possible Causes

Researchers have studied and validated many antecedents associated with

organizational injustice Based on the in-depth interviews with our staff and especially, human resources manager, the following elements are considered to be the antecedents of our organizational injustice that could significantly affect employees’ perception of fairness, and as a consequence, the branch’s performance

1.1 Performance Rating System

Individuals usually compare their input – output proportions with those of their peers

to identify the level of fairness; if these comparisons are proportional, it is perceived as fairness or distribution justice15 Thus, causes of distributive injustice can be defined as factors including the actual performance rating of the raters and employees’ comparisons

From the performance rating perspective, researchers found that higher distributive justice were linked to higher ratings39 However, individuals usually overestimate their contribution to the organization which create a false positive relationship between

performance rating and distribution justice40 Thus, unfair performance rating is considered

to be a factor that lead to distribution injustice as long as it is the rater’s fault and

performance rating should not take into account the individual perception of their

contribution

Studies reveal that in spite of being both essential, procedure-based fairness is more important than the equal distribution justice41 which means that employees are “willing to accept some injustice in the outcomes if they perceive the procedure itself to be fair”42 As

the perception of allocated rewards among employees at BIDV – South Saigon Branch is considered to be unfair and ambiguous, the underlying reason is not simply just the

distribution process itself but the performance rating procedure also plays an actual

important role In fact, managers often rate their employees’ work by using a score-board created years ago, in which some items are outdated since the work of frontline employees

is updated every single year Moreover, some items in the score-board are qualitative

evaluation which do not have a clear instruction on rating This shortcoming forced the manager to appraise their employees’ work by his own feeling which easily leads to a bias evaluation

For example, in the score-board of corporate banking officer: Finding, selecting, approaching customers in need of banking services; persuade them to use BIDV services accounts for 25% score of qualitative duties, or instructing customers to complete the paper works makes up 20% score of qualitative duties (the detail score-board can be found in appendix C) Despite having a great influence on the score-board result, these criteria do not have a clear instruction on how to rate employees The managers just subjectively give the scores within his or her own discretion, and thus injustice evaluation can be considered to be inevitable

In addition, over evaluated an employee can lead to laziness and dependence The branch’s performance is not efficient as a consequence of the dissatisfaction in one part of employees as well as the unoptimized productivity of others Hence, one reason of

organizational injustice in the branch could lie in the inappropriate performance rating system

1.2 Employee Participation

“Employee participation includes management recognizing individual employees’ opinions and input, so that employees understand that management views them as unique and individually valuable to running the business”43 Similar to employee involvement, employee participation involves management actively encouraging staff to assist in running and improving business processes and operations43

Many employees usually complain that they do not have any chance to participate in the process of building employee evaluation method or distributing their reward or making some decision For instance, Quoc – a retail banking officer is not happy with the way his manager treated him, he prefers his manager to talk with him before making any decision about his job instead of deciding on his own

According to Kernan et al.44, employees believe that providing input will help

persuade management to enact decisions that are beneficial to their interests In other words, those who involve in decision-making or other organizational procedures will have a better opportunity to ensure that fair procedures are followed which means procedural justice perceptions are enhanced

At BIDV – South Saigon Branch, in some cases, policy makers create some

expression tests to get input from employees before setting the policy framework of the organization or modifying employee evaluation method but the results are really poor The reason behind this situation is that employees usually do not truly understand the

importance of these policies as they think these policies do not directly affect their own interests Many of them supposed that their opinions would not be seriously considered and

whatever their ideas were, it would not be able to change the decisions about the framework system An illustration of this is that when the headquarters established a competition on composing new retail sale message in early 2016, an extremely small number of employees took part in the competition even though the rewards are very attractive At the due day, the headquarters had to extend the competition by three months But till the end of 2016, the competition still does not achieve the desire number of participants As a consequence, the headquarters has to extend it one more time although there is no sign of a better result

While some others do not raise their ideas since they are afraid of being offensive to their managers and getting into trouble later “I really want to (talk to the managers) but I

am kind of afraid of being offensive to them I don’t want to get into any trouble You know, for mad words, deaf ears” – said Vinh – a resigned corporate banking officer This means that employees do not have enough support and encouragement from their managers

to get involve in the business processes

As stated by Kernan et al.44, allowing input to employees would give them the

opportunity to voice their concerns and potentially shape procedures of the organization which makes them believe that they have influence on the managers’ decisions that are beneficial to their interests Apparently, encouraging employees’ participation could help them ensure that fair procedures are followed, and as a consequence of that, enhancing procedural justice perceptions Or in other words, lack of employees’ participation can be considered as one of the organizational injustice antecedents at BIDV – South Saigon

branch

1.3 Communication

Given that works in banking environments are extremely stressful with high risk level, high psychological pressures, high work pace as well as high level of uncertainty, the quality of information employees receive from their managers or communication quality between employees and employers should be consider to be one of the antecedents of

organizational justice, especially interpersonal justice

Several researchers have found that effective communication strategy which means providing employees clear and rational explanations for managers’ decisions enhances perceptions of fairness and the perceived quality of the communications is positively related

to justice perceptions 44 For instance, Daly and Geyer45 found that explanations for

decisions are likely to be effective when they addressed issues that employees felt they had

a right to know about in a manner that they regard as sincere If the explanation was not adequate, the result could be a backfiring45

Derive from the in-depth interview with my colleagues, the quality of

communication between managers and employees at the branch is not very ideal

Specifically, Vinh – corporate banking officer – concluded that his supervisor seemed to be quite cold He did not even look at him when he answered or asked questions, his responses were monosyllabic and he did not initiated conversations with his employees

Similarly, retail banking department manager is also not very good at communication with his employees Quoc – one of the retail banking officer – thinks that his manager

should exchange views with employees before making any decision related to their duties instead of deciding all by himself Specifically, every credit officer shares the same job

description but managers can divide their employees into groups and assign them with some specific tasks in order to specialize works in the department It is the manager’s right to do

so but problem arises when he divides and assign jobs to his staff without any meeting, discussion or pre-information This pushes employees into a passive situation which makes them feel insecure about their job Quoc thinks he should be treated with more respect and dignity by being supplied with information beforehand rather than being put under a force circumstance

Communication that is perceived to be accurate, timely, and helpful will be central to sense-making and uncertainly reduction and will be critical in developing positive views about fairness44 In addition, Bruning et al.’s works indicated that employee satisfaction with the timeliness, accuracy, and value of the information that management provided predicted subsequent justice perceptions which means there is a link between effective communication and fairness perceptions in organizational environment46

Consistent with prior research, Kernan et al.44 proposed in their study that fairness perceptions should depend on additional communication elements Their work also

provided support for communication as an antecedent of organizational justice, and

communication quality was a significant predictor of interpersonal and informational

fairness44

1.4 Implementation

Derived from the interviews with employees, the final factor that could affect their perception of organizational justice is implementation In fact, a lot of research shows that employees form their own interpretations of changes and respond base on their own

understanding of these changes47 and thus, Kernan et al.44 argued that employees form judgments about the efficacy of any workforce reconfiguration by examining the

consistency between the objectives which are communicated by management at the

beginning and management’s actions, in other words, employees judge their organization’s justice by the way their manager put his stated objectives into effect

Implementation is defined, in short, as the act of putting a plan into action to reach goal48 As such, implementation must follow any preliminary thinking in order for

something to actually happen49 Kernan et al.44 found that implementation perception of employees is considered to affect organizational justice, especially in the interpersonal area,

as they deal with issues of trust and whether employees feel they are being treated with respect and dignity; the more employees perceive consistency between management

objectives and behaviors, the greater their perceptions of interpersonal justice50 Moreover, implementation is also found to have effect on informational justice perceptions as

judgments about the consistency between procedures and managers’ stated objectives can give employees the basis to evaluate the validity of major organizational changes; in

particular, the more consistency between management objectives and behaviors perceived

by employees, the greater their perceptions of interpersonal justice50

In the case of BIDV – South Saigon Branch, organizational injustice can arise from the inconsistency between the stated pay and compensation policies for MHB employees after the merger with BIDV and the way they are treated in reality

Specifically, Thoa – an ex-MHB employee believed that the new regulatory for MHB employee after the merger was unfair when the amount of work she had to process is as

high or sometimes even higher than BIDV staff Moreover, she had to work overtime regularly and sacrificed her family life to accomplish her job Thoa and her colleagues at MHB were promised to have a correspond compensation with BIDV staff at the beginning

of the merger, however they were not informed in advance that they had to have some kind

of certificates to be paid as much as the BIDV staff And as a result, none of the MHB’s employees have the same payment as BIDV’s at South Saigon Branch This made Thoa think that there is a discrepancy in the stated policies and results in practice She also believed that the way of judging new merger staff was not reasonable as they might not have some certificates but with their wide range of experience they could still get the job done nicely This was such a big letdown for her since the problem did not exist in other BIDV branches This situation had pushed her to the edge of finding a new job

Hence, it seems reasonable to conclude that the inconsistency between management objectives and behaviors perceived by employees or the inconsistency between the stated objectives and the results in practice can cause organizational injustice, especially in

interpersonal and informational injustice To put it differently, poor implementation can be considered to be an antecedent organizational injustice at BIDV – South Saigon branch and should be eliminated as soon as possible